China was famous for having the highest hash rates for Bitcoin mining, accounting for up to 60% of worldwide hash rates. The nation started a big crackdown in the summer of 2021, but a District court rules that mining is not unlawful.

The Chongming District People’s Court in Shanghai ruled over a case in which the defendant was accused with cryptocurrency mining. According to court records, the defendant known as Zhu unlawfully mined Ether on 25 machines by using his position as a company’s network maintenance worker.

According to the prosecution, Zhu installed a graphics card, mining, and remotely operated software, which he used to mine Ether illegally, earning him around 16,000 yuan. They also claimed in court that Zhu did not act alone, but had an accomplice who worked with him to carry out the operation.

Presiding Judge Yang Qingtang convened a collegial panel to investigate the case’s merits in line with the law. In the end, the defendant was sentenced to 11 months in jail and an RMB 5,000 fine, but not for the bitcoin mining accusations. Rather, he was charged with illegally managing a computer information system.

Qingtang extolled the virtues of cryptocurrency mining as an activity that has the potential to improve a country’s economy. However, the judge added that, while not illegal, the activity is incompatible with the current climate of energy conservation and carbon emission reduction. He went on to say that the conviction was due to a violation of the law by unlawfully managing computer systems.

Last year, the Chinese government’s senior brass, including 10 Ministries and Commissions, released the Notice on Rectifying “Virtual Currency Mining Activities,” emphasizing the massive amount of energy needed by cryptocurrency mining operations. Their resolution said that it increased carbon emissions and contributed a negligible amount to the economy.

“Virtual currency mining consumes a lot of energy and emits a lot of CO2, and it doesn’t help industry growth or technical advancement,” said Meng Wei, a spokeswoman for China’s National Development and Reform Commission. “Blind and chaotic growth has a significant negative impact on encouraging high-quality economic and social development, energy conservation, and emissions reduction.”

The ramifications of this resolution were dire for mining businesses in China, as a full-fledged government crackdown ensued. Miners fled the nation, driving Bitcoin hash rates to new lows. As hashrates fell, Bitcoin and the entire cryptocurrency market felt the shockwaves as prices plummeted in the aftermath of the crackdown.

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